Station Casinos loses $53.5 million in first quarter

By Steve Green (contact)

Published Monday, May 17, 2010 | 10:07 a.m.

Updated Monday, May 17, 2010 | 1:19 p.m.

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Station Casinos Inc. today said it lost $53.5 million in the first quarter as it spent $19.3 million on its bankruptcy reorganization. The loss compares to a loss in 2009’s first quarter of $33.7 million.

Net revenue of $249.4 million fell 11.8 percent from the prior year's first quarter as the recession continued to deter spending at the company’s Las Vegas locals casinos and hotels.

Station’s major Las Vegas operations generated revenue in the quarter of $227.6 million, down 12.1 percent from the year-ago quarter, and operating income of $48.2 million, down 20.2 percent.

These properties are Palace Station, Boulder Station, Sunset Station, Red Rock Resort, Texas Station, Santa Fe Station and two Fiestas.

Station said that companywide, casino revenue fell 11.2 percent, food and beverage revenue fell 25.2 percent and room revenue fell 13.7 percent.

At the company’s hotels, occupancy fell from 85 percent in the 2009 quarter to 79 percent in the 2010 quarter and the average daily room rate fell from $71 to $66.

The company’s first quarter earnings from its Green Valley Ranch joint venture in Henderson with the Greenspun family, owner of the Las Vegas Sun, were $3.6 million representing 50 percent of Green Valley Ranch’s operating income.

For the first quarter, Green Valley Ranch generated adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — before management fees of $12.9 million, a decrease of 25.8 percent compared to the same period in the prior year. Green Valley Ranch reported a net loss of $53.2 million for the first quarter as compared to net income of $1.3 million in the same period in the prior year.

Under Station’s bankruptcy reorganization plan, lenders would foreclose on four "PropCo" properties: Palace Station, Boulder Station, Sunset Station and Red Rock Resort. Members of Station’s founding Fertitta family would have an ownership stake in the company owning these properties as well as the Wild Wild West, and the Fertittas would manage these properties.

Several other properties – including Texas Station, Santa Fe Station and two Fiestas – would be auctioned by the bankruptcy court with the Fertittas among the bidders.

Station attorneys have recently clarified that Station’s interests in Green Valley Ranch and another hotel-casino partnership with the Greenspuns, Aliante Station in North Las Vegas, aren’t going to be included in the auction.

In its quarterly report today, Station said that as a result of losses at Green Valley Ranch since 2008, and a 2009 impairment in the value of its joint venture investment in the property, its investment in Green Valley Ranch was valued at a negative $19 million as of March 31.

Similarly, because of ongoing losses at Aliante Station and an impairment of Station’s joint venture investment there taken in 2008, its investment in Aliante was valued as of March 31 at a negative $44.3 million.

Another joint venture investment by Station that has substantially declined in value is the 52 acres of property planned for development along Rancho Road south of Palace Station. The joint venture planned to build a mixed-use residential, retail and entertainment project there.

"As a result of the significant decline in real estate values in the Las Vegas valley," an impairment charge was taken by Station for that land in 2009 and as of March 31 Station’s investment there was worth a negative $104.4 million, Station said in today’s report.